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Appearing in the first issue of “Connection Technology” twenty years ago, industry analyst Ken Fleck still closely follows shipment volume, manufacturers, price points, and other dramatic industry changes.
By Ken Fleck
We have seen good and bad in connector industry growth, but overall, in the last twenty years, growth has been steady. Total shipments of the connector industry in 1984-including connectors, cable assemblies, and backplanes-was $19 billion. In 2004, the industry reached $34.7 billion, which over the 20-year period was a compound growth rate (CGR) of 3%. However, the 3% CGR is misleading due to the major downturn following the year 2000. For the 16 years from 1984 to 2000, the industry growth was a CGR of 5.5%. Following 2000, the industry declined a whopping 22.5% in 2001 and 13.7% in 2002.
Over the twenty-year period, there were five years that were negative—1976, 1982, 1985, 2001, and 2002. On the other hand, there were 13 years during the period in which the industry increased by over 10%. Comparing growth rates over the twenty-year period is also complicated due to the variations in exchange rates such as the yen and, of course, in 1984 before the euro, there were individual currencies such as the deutschmark, pound, and franc.
Changes in manufacturers
In 1984, the industry leaders were (1) AMP, (2) Berg, (3) ITT Cannon, (4) Amphenol, (5) Cinch, (6) Bendix, (7) Winchester, (8) 3M, (9) Molex and (10) Burndy. Twenty years later, five of these companies have merged into others - AMP to Tyco, Berg to FCI, Bendix to Amphenol, Winchester to Northrop Grumman, and Burndy to FCI.
 Ken Fleck appeared in the pages of Connection Technology in 1985 (left) and Connector Specifier in 2004 (right). |
In 2004, the top 10 leaders are (1) Tyco, (2) Molex, (3) FCI, (4) Delphi, (5) Amphenol, (6) Hon Hai, (7) JAE, (8) JST, (9) Hirose, and (10) Fujitsu.
During this twenty-year period, Tyco increased at a CGR of 12.6% while Molex’s CGR was 17.5% and Amphenol’s CGR was 11.7%. There have been many acquisitions and mergers during the twenty-year period. Tyco acquired Thomas & Betts, which previously had acquired Augat. Also, M/A COM, Raychem, Elcon, Siemens, Buchanan, and Microdot, among others, have been acquired. Amphenol and Bendix were merged and additionally Pyle National was acquired. FCI acquired Burndy and Berg, among others. Winchester was acquired by Litton and later by Northrop.
Delphi was principally a captive supplier in 1984, and the non-captive shipments were Hughes and a small percentage of Packard. Packard Electric, however, went through an IPO and the captive activity for General Motors became non-captive, raising Delphi to number four worldwide.
Hon Hai, also known as Foxconn, has become a major force in the industry since 1984 and now is ranked number six. Four Japanese companies have entered the top ten as of 2004—JAE, JST, Hirose, and Fujitsu. Others involved in acquisitions are too numerous to mention. However, Molex, ITT Cannon, and 3M have each closed acquisitions.
Production in Asia
China now produces 34% of the world’s connectors and cable assemblies. Evolving as a major force in the last decade has been mainland China, which produced $13.3 billion worth of connectors in 2004. The transfer of products to China from the United States, Europe, and Japan has been increasing year by year, averaging some $1 billion each year. This impact on the connector industry has been electronic equipment transfer to China, such as desktops, notebooks, servers, cell handsets, and many other types of electronic equipment (see Connector Specifier, June 2004, p. 17).
Other dramatic changes
One dramatic change in the past two decades is the growth in electronic manufacturing services (EMS) and original design manufacturers (ODM), which reached $11.5 billion in 2004, accounting for 33% of all customers. Another major change (for the worse in the U.S.) is price erosion, stemming principally from China, which has caused a major headache for the industry. Commodity product lines have been declining up to 20% each year.
High-bandwidth/high-speed connectors have evolved since 1988. At that time, they were 622 Mbit/s, and now have increased to 6.125 Gbit/s with designs now being released at over 10 Gbit/s. The industry has developed 72 individual designs. High-density connectors have evolved from 1.27-mm pitch back in 1984 to 1.0, 0.8, 0.635, 0.5, 0.4, and 0.3 mm. In a few cases, products are available at 0.2, 0.1, and 0.05 mm.
Serial interfaces have evolved dramatically, including Gigabit Ethernet, 10-Gigabit Ethernet, InfiniBand, USB, mini-USB, serial ATA, and SAS, among others. Furthermore, automotive electronic content per vehicle has increased to $1,615, which has pushed the automotive connector sector to over $5 billion. And in a separate category, cellphones have gone from a futuristic pie-in-the-sky idea to part of every-day, mainstream life during this period, with production in 2004 of over 500 million units worldwide.
KEN FLECK is advisor to Fleck Research, 501 North Golden Circle, Santa Ana, CA 92705. Tel: (714) 953-9000; email ken@fleckresearch.com.
